Follow Us

What are ‘ghost restaurants’? That spot on your delivery app might not actually exist

What are ‘ghost restaurants’? That spot on your delivery app might not actually exist

[ad_1]

Restaurants that use the strategy say it helps them show up more frequently in online search results, and increases their chances of making a sale.

“The virtual restaurants are not as busy as Maria’s, but every little thing helps, especially with the last year we have been through,” said Cristian Mancia, owner of Maria’s. “It is nice to have more options out there for people to look at.”

The competition for online orders is only getting more intense, as restaurant chains join the trend and other entrepreneurs look to launch virtual restaurants out of commercial kitchens with no storefront at all. Some in the industry wonder whether the strategy is sound for the long term, given the thin margins on food sold through third-party apps that charge commissions for their orders.

Mancia said he has seen an increase in orders thanks to the online-only restaurants, which now make up about 10 percent of his sales. Still, he’s not convinced virtual restaurants will be the game-changer he hoped they might be when he signed up. “Any third-party company will reach out to you and give you all these crazy numbers,” he said, “but it is not that overwhelming.”

Virtual restaurants were beginning to crop up even before COVID-19, but Bob Luz, president of the state’s restaurant association, said they “grew exponentially” over the past year as an option for making up steep losses in the dining room.

In some cases, virtual restaurants rebrand sections of a restaurant’s menu to highlight food the establishment may not be known for. Other times they attempt to target a different customer base with a fresh name and different menu images.

Scorpion Bar, in the Seaport District, is known for being an upscale destination for a night out — the type of place that might not appeal to someone ordering delivery so they can watch Netflix at home. So during the pandemic, which pummeled the nightlife scene, Scorpion launched Wicked Wings and Wicked Big Burritos out of its kitchen at 58 Seaport Blvd.

“It is adding thousands of revenue per day,” said Randy Greenstein, co-owner of the hospitality group that owns Scorpion. “It’s not going to make you rich, but what it is going to do is add more takeout orders.”

Restaurant chains are joining the trend too. Bertucci’s off of Route 9 in Westborough makes food for celebrity-inspired virtual restaurants, including Tyga Bites, a chicken nugget concept from the rapper Tyga, and Mariah’s Cookies by Mariah Carey. The online brands are managed by Virtual Dining Concepts, a business run by Robert Earl, who also owns Bertucci’s.

In some instances, food technology companies are actively recruiting restaurants, enticing them to launch virtual concepts with the promise of increased orders.

Uber Eats has been in the game since 2017, tracking what consumers search for in a given area on its app, then convincing restaurants to fill unmet demand. For example, if users consistently search for poke bowls but come up short, Uber Eats might reach out to a sushi restaurant and recommend that it launch virtual restaurants with “poke” in their name.

Meghan Casserly, a spokesperson for Uber Eats, said the company has more than 10,000 virtual restaurants on its platform in the United States, up from about 3,000 in 2019. The company said it could not provide data for Massachusetts.

A startup tied to ex-Uber chief executive Travis Kalanick, CloudKitchens, has been licensing dozens of virtual brands to Massachusetts restaurants, including Maria’s. CloudKitchens (which does business with restaurants under the names Future Foods and Otter) creates and sells cheeky, trend-driven brands, such as Send Noods, which operates out of Yoshi’s Japanese and Korean Cuisine in Somerville, or The Hot Italian, run by Felcaro Pizzeria in Beacon Hill.

Of course, launching any type of virtual restaurant is only worthwhile if it is profitable. The cost of takeout and delivery orders involve buying packaging, paying delivery fees, and the lost potential of add-on sales that happen when a customer opens a menu while sitting at a table and decides to order an appetizer or another beer.

Companies like DoorDash and Uber Eats also charge commissions on sales through their platforms, and CloudKitchens tacks on an additional fee when a customer orders from one of its virtual concepts.

As the industry emerges from the pandemic, some wonder whether virtual restaurants will stick around, and whether the same companies helping restaurants support their virtual concepts will start launching their own eateries, blurring the line between tech platforms and restaurant operators.

In other cities, CloudKitchens has turned warehouses into delivery-only kitchen hubs to house its virtual restaurants, while also leasing spaces to existing restaurants who want more space to prepare orders. Public records show CloudKitchens owns a more than 20,000-square-foot space in the Boston area.

The company did not respond to questions about its plans here.

As a commissary kitchen operator herself, Jen Faigel, executive director of Commonwealth Kitchen in Dorchester, has kept an eye on the virtual restaurant and shared kitchen scene. She’s concerned about the power well-funded tech companies could have over restaurants who want to stay competitive in the digital age.

“In that line of business, they control access to the customer, access to the means of production, access to their physical space,” she said. “From a restaurant and chef community’s perspective, it is potentially really debilitating.”


Anissa Gardizy can be reached at anissa.gardizy@globe.com. Follow her on Twitter @anissagardizy8.



[ad_2]

Leave a Reply

Your email address will not be published. Required fields are marked *

91 − 83 =

%d bloggers like this: